Daniels Non-Mea Culpa For FSSA Privatization Debacle

In his new book, "Keeping The Republic," Gov. Mitch Daniels devotes about three pages to "Saying Oops", his take on the FSSA privatization debacle. "One of the words people in public life find hard to say is oops," Daniels writes in introducing the topic. He begins by describing a welfare system his administration had inherited as "rife with error." Daniels says his administration spent a year trying to figure out how to fix the system when it came to the conclusion that "no amount of money would be able to get that system functioning properly." He says his administration concluded it needed "a modern information back office, along with new front-line processes to interact with the public in a timely and accurate way."

As I documented based on the personal observations of Carl Moldthan, who was the only member of Daniels FSSA to actually visit each of the state's county welfare offices and talk to the front-line workers about what was working and not working with the welfare system, the front-line workers had never been equipped with the modern tools and systems to efficiently and accurately perform their responsibilities. Daniels claims that his administration determined that it would cost more to rebuild the existing system--"several hundred million dollars more"--than outsourcing the responsibilities to a team of private contractors. "The contract promised millions of dollars in savings from the status quo, and far more compared to the state's attempting to fix its problems within the existing bureaucracy."

Daniels' book only confirms that he never read the critical analysis Moldthan sent to him advising him that it was a big mistake to outsource the services performed by the existing bureaucracy rather than to improve upon it. Moldthan pointed out in his analysis to Daniels that his own FSSA Secretary, Mitch Roob, admitted that outsourcing the welfare services would lead to no savings. Indeed, the state would spend nearly a half billions dollars on its outsourcing effort before Daniels would conclude that the effort had failed. Daniels concedes in his book that IBM's new system "produced just as many errors" as the old system. In fact, it produced even more errors in the few localities where it was rolled out.

In describing his cancellation of the IBM contract, Daniels says the state "kept the features of the IBM approach that worked well and jettisoned the elements that failed." He claims that the new hybrid system that is now being rolled out is achieving "dramatically better results than the system we started with." Again, this would have been possible with the old system simply by purchasing modern computers and systems that allowed the front-line workers the modern tools the private contract workers have at their disposal. As Moldthan pointed out, this had never been considered as an option despite Daniels' claim to the contrary. The decision had already been made by his FSSA Secretary Mitch Roob to privatize the welfare services before any studying of the system had been undertaken.

Despite the fact that his welfare privatization initiative had both Republican and Democratic critics, he lumps all of its critics into the category of "partisan opponents." "Our partisan opponents pounced on all this as a 'failure of privatization,' even though they had remained silent while the previous all-government system racked up its worst-in-America record and stole money from poor people," he writes. "Much of the media coverage was inaccurate, incomplete, and irresponsible, parroting the partisan attacks," he continued. He concludes, "In my view, the experience validates the practice of bringing private solutions to bear on public needs." Not exactly, Mitch. It validates that the practice of "Pay To Play" is alive and well in your administration. The only beneficiaries of this effort to date have been the state contractors and lawyers who have contributed handsomely to your campaign coffers.

Daniels claims he admitted he made a mistake when he fired IBM. "My fellow citizens weighed the issue, saw through the partisanship and sloppy journalism, and shrugged it off," he writes. "To the disappointment of our attackers, they behaved like responsible citizens." Carl Moldthan weeps from his grave. He behaved liked a responsible citizen and tried to warn you what your FSSA Secretary was doing to reward his former employer, ACS, was a big mistake and was not being undertaken to save the taxpayers money as you were representing to the public. To Moldthan's disappointment, he got taken to the woodshed for his brutal honesty and relegated to a meaningless paper-shuffling job before he left your administration in total disillusionment. Daniels' take on his adminstration's welfare privatization only confirms his own inability to say "oops."